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Sir
I want to clarify a doubt
The major effect of administrator is that the creditor cannot enforce any charge or security over the assets of company
Now kaplan book states
That in COMPULSORY LIQUIDATION :
All actions for recovery of debts against the company stops
Sir does this mean that the creditor cannot enforce the charge or security over the asset of the company???Yes, because now all the assets are in the hands of the liquidator. However, the liquidator will most probably finish up recognising the claim of the creditors (and particularly the claims of the secured creditors)
The point about the stopping of the pursuit of claims is to hand the power to the liquidator to recognise or reject the proposed claims.
The point about the effect of the appointment of an administrator is that this is an intermediary step to try to manage the company’s affairs and set the company back onto a sound financial footing. Thus the freezing of potential claims is to give the administrator breathing space to try to find a route to follow whereby the company will be rescued.
Whereas the administrator is trying to rescue the company, the liquidator has no such grand plans! The liquidator is there for one purpose only – the liquidator is there to kill the company!
Thanks sir
In a nutshell both liquidation and administration will stop the enforcement of charges and security of the creditors of the company
Right?
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